Proxy advisory firm flays Cairn India on loan disclosure issue

Cairn India extending USD 1.25 billion loan to Vedanta Group and not making proper disclosures about this related party transaction shows "disregard for fair disclosures", according to a proxy advisory firm.
Besides, InGovern Research Services in a report today said capital market watchdog Sebi should look into the matter.
"That the company chooses to disclose the related party transaction at an earnings call shows disregard for fair disclosure on the company, and merits a full-fledged investigation by Sebi," it said.
InGovern said Cairn India has not made a formal disclosure of this related party transaction to stock exchanges.
Cairn, which has already disbursed USD 800 million out of the total loan of USD 1.25 billion, made the loan disclosure after analysts raised doubts on utilisation of cash reserves.

Vedanta Group holds 59.90 per cent stake in Cairn India.

Under the new Companies Act which came into effect from April 1, companies need to take shareholder nod for related party transactions.
Cairn India yesterday held its annual general meeting of shareholders in Mumbai but did not make any disclosures of the loan.
"The Board of Directors seems to have been mute spectators of such a related party transaction.
"In the interest of good governance, the Board of Directors should have insisted that the company take shareholders' approval for the related party transaction with one shareholder," the report said.